NY Small Businesses Are Being Crushed by Thousands of Dollars in State UI taxes and Special Assessments

December 18, 2022 Last Edit: June 5, 2025

Program mismanagement and staggering levels of fraud statewide leave small businesses owners and their employees holding the bag and looking for leadership in Albany

NY Small Businesses Are Being Crushed by Thousands of Dollars in State UI taxes and Special Assessments

Last month — a week after Election Day — a stunning report by NY State Comptroller Thomas DiNapoli was announced disclosing $11 billion in fraudulent Unemployment Insurance (UI) payments by New York State. NFIB had been warning Governor Hochul and state lawmakers for more than a year that the COVID lockdowns and likely significant levels of mismanagement and fraud in administering the UI benefits during the pandemic was a ticking timebomb for Main Street businesses. But the disclosure revealed that the level of fraud and its consequences heaped upon blameless employers across the state was beyond advocates’ worst fears. The comptroller’s blockbuster report on the $11 billion in fraudulent payments demonstrated the appalling failures of state government. Worse still, New York State had penalized hardworking small business owners, who were forced to shut down during the pandemic, with thousands upon thousands of dollars in state UI taxes and special assessments to make up for the disbursements to those put out of work. NFIB has been calling on New York State to pay off the $7.7 billion in UI debt and stop forcing Main Street to bear the full cost of state public policy decisions and program failure. The report clearly demonstrated the malfeasance of state government, and New York has a responsibility to right this wrong by paying off its UI debt in full, refunding small businesses the special assessments they made in September, and restoring UI tax rates to pre-pandemic levels. Small businesses should not be on the hook to pay for fraud that the state allowed to occur on its watch. This UI debt crisis, no less than an unjust Covid Tax on small business, must be addressed as soon as the new Legislature convenes in January. NFIB State Director Ashley Ranslow has repeatedly called on lawmakers to use federal pandemic aid or surplus state tax revenues to stabilize the UI Trust Fund. Indeed, New York’s elected leaders had the opportunity all year to prevent surcharges from hitting businesses mailboxes by using the billions of dollars in federal pandemic aid, as many states have done, to pay down the state’s UI debt and interest owed on the debt. Instead, the state skirted responsibility and left hardworking small business owners to foot the bill. In its coverage of this ongoing debt crisis, the Albany Times Union spoke with two NFIB members, Peter Elitzer of Peter Harris Clothing, and Tracy Snell of Snell Septic Service. You can read this article and other coverage of this issue and NFIB’s public advocacy at the following links: See NFIB in the Times Union: https://www.timesunion.com/business/article/Business-large-and-small-decry-what-they-see-as-a-17382986.php?IPID=Times-Union-HP-business-package#photo-22820441 See NFIB in Bloomberg Law: https://news.bloomberglaw.com/daily-labor-report/n-y-businesses-stuck-with-7-7-billion-covid-unemployment-debt Listen to NFIB on WNYC’s Capitol Pressroom: https://www.wqxr.org/story/employers-forced-to-pay-new-yorks-unemployment-debts/ Throughout the COVID pandemic, New York State borrowed money from the federal government for the Unemployment Insurance program, and the state failed to repay this loan in the 2022 budget. Under existing New York State law, the interest owed on this federal debt must be repaid through an “Interest Assessment Surcharge” on businesses, and lawmakers did nothing to stop it. The Comptroller’s fraud report puts this failure to act in even starker relief. The resultant Interest Assessment Surcharge (IAS), an additional Unemployment Insurance expense that all business owners had to pay by September 30, amounted to $27.60 per employee. Businesses will continue to see a yearly surcharge as long as New York State has the outstanding debt and accrues interest. And this doesn’t take into account additional hardship if the economy slows down further or goes into recession in the coming year. We ask NFIB members and fellow small business owners to please share how these increases are affecting your business by completing this short survey. Your responses will help us fight for UI funding to reduce taxes, eliminate future surcharges, and give small businesses needed relief.

Topics:

Taxes

State:

New York

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